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Yes. You need to comply with anti-cutback rules and 204(h). Depending on plan terms, 2025 may not be possible either. And they have 10 days to avoid a funding deficiency if 2024 MRC is not funded.

You need to comply with anti-cutback rules and 204(h) but otherwise should be OK. I agree you do not want frequent amendments but this seems to be in response to a change in business conditions. However, I would not then jump back up next year - I'd make them ride this reduction for a few years. The last thing you want is a series of amendments bouncing owner benefits up and down.

Thanks Peter. I appreciate your technical points. But you are correct that I would not suggest/advise a client to ignore the proposed interpretation - that's for the legal/tax counsel to handle. For our mostly small clients, and the relatively few situations where this actually comes in to play, it is unlikely to justify the expense/risk to seek counsel. As a general rule, I favor discretion over valor when dealing with regulatory authorities.

I agree with the need for documentation regarding the termination of Employer B's participation in the Plan. However, I am not certain about the reporting... though I may be misunderstanding the comments regarding reporting. It seems to me that Employer A would file the following: For the year of the distribution, the Plan's Form 5500 indicating under Part IA that the Plan was a MEP, including a Schedule MEP that provides information for both Employer A and Employer B in Part II 2a. Note the 5500 is an annual disclosure form covering the PERIOD beginning ___ and ending ___. It is not based solely on the last day of the year. It seems to me no matter what day the distribution was made during that year, for at least one day in that year the Plan was a MEP. Also, the Schedule MEP Part II specifically asks for the % of contributions made "for the year" by the participating employers. So, it seems there would be information required to be disclosed for Employer B (though this may or may not be $0 depending on the facts). The other column in the Schedule MEP Part II requests account balance info relevant to each participating employer but it seems that would be filled in with $0 since this information would be the Employer B balance determined "at the end of the year". Then, for the year after the distribution, the Plan's Form 5500 indicating under Part IA that the Plan is a single employer plan (and no Schedule MEP would be submitted). The omission of the Schedule MEP in that following year would indicate to the IRS that the employer not listed in the Form 5500 single employer filing that was listed in the prior year Schedule MEP is no longer a participating employer. (This seems to correlate to how the filing would be done if the Plan were still a MEP, i.e., the 5500 would be marked as being a MEP but no information concerning Employer B would be included on the Schedule MEP)). I have not had to file a 5500 covering this type of situation before so I have not researched this and am just going off of what we have done when individual employers have withdrawn from MEPs we handle.

I agree with your assessment, not leased employees.